Zuckerman Loss of $165 Million Makes Zell Master of Real Estate
Bloomberg reports: Billionaire Mortimer Zuckerman just learned a hard lesson from billionaire Sam Zell.
Zuckerman’s Boston Properties Inc. said this week that three Manhattan skyscrapers it bought in May lost about $165 million of value in seven months. Sam Zell exited the office property market in February 2007, selling Equity Office Properties Trust and its more than 500 buildings to Blackstone Group for $39 billion in debt and equity, the largest leveraged buyout at the time. It was the peak of the market.
“After that, the world changed,” said Dan Fasulo, managing director at real estate data provider Real Capital Analytics.
Boston Properties disclosed the writedowns as it reported its first quarterly net loss in at least eight years. Zuckerman bought the three office towers from developer Harry Macklowe, who was forced to sell because he had to repay short-term loans he used to buy eight buildings from Zell in February 2007.
Financial companies, battered by more than $1 trillion of write-downs and credit-market losses since 2007, have tightened commercial real estate lending. US sales of office buildings plunged 88 percent since the second quarter of 2007, according to New York-based Real Capital Analytics.
The tower that Boston Properties bought in May that kept its value was the General Motors Building, the $2.8 billion skyscraper on Fifth Avenue adjacent to Central Park.
“You can’t fault Mort Zuckerman for buying the single best
property in the US, the GM Building,” New York real estate
billionaire Richard LeFrak said in an interview.
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Posted by: Nina Turner